In his latest tariff maneuver, President Trump again revealed his biggest target remains China, now subject to a 145% tariff. All eyes were on China to see if that nation also raised tariffs on the US again, and indeed it did on Friday--to 125%.
Editor's Note: The tariff increase on China was reported by President Trump as making the total 125% but corrected by the White House on Thursday to 145% to include a previous 20% tariff on China designed to reduce fentanyl shipments.
In a Truth Social post mid-day Wednesday, the president explained the expanded tariff on China was “based on the lack of respect that China has shown to the World’s Markets…At some point, hopefully in the near future, China will realize that the days of ripping off the USA andother Countries is no longer sutainable or acceptable.”
In the same post, President Trump announced a 90 day pause on reciprocal tariffs affecting more than 75 countries while excluding China and immediately hiking its tariff to 145%. During the pause, those countries will have a lowered reciprocal tariff of 10%, far below what was announced April 2.
Investors were buoyed by the pause, after days in the red, with the tech-heavy Nasdaq up by 9% immediately after the news broke. However, the strong role China plays in electronics supplied to US companies makes the US-China trade war more desperate than ever. Markets were down again on Thursday with the Nasdaq down by more than 5%. The decline seemed to improve early Friday, however.
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"China wants to make a deal" on tariffs, President Trump told reporters. "China just doesn't know how to do it."
He and top aides have consistently said the tariffs are intended to bring other countries to the bargaining table to help correct decades of trade imbalances with the US. At the same time Trump was making his Truth Social post, US Trade Representative Jamieson Greer was testifying before Congress about the need for tariffs to bring manufacturing jobs back to the US. "We need to reshore," he said. "The US lost 5 million manufacturing jobs."
Greer will be one of a team of negotiators with countries on new trade agreements, saying he hoped they can move quickly on resolving tariff differences. "Biden left the largest trade deficit...of $1.2 trillion. It's extreme and unsustainable." The US has a $36 trillion national debt and a $2 billion to $3 billion budget deficit that "no one want to pass on to our kids," he said.
Treasury Secretary Scott Bessent told reporters that reciprocal tariffs by China will hurt China more than they hurt the US because of a large trade imbalance between the two countries. China sells five times as many products into the US as compared to the US sales in China, he noted.
Before Trump raised the tariff on China to 145%, analyst Patrick Moorhead had noted the dire impact of steep tariffs on China for electronics manufacturers because most notebook computers are manufactured in China where they will get the "full force of tariffs." He said Apple will be the worst off tech company regarding tariffs because most of its manufacturing happens there, accounting for 90% of Apple revenue. It could take Apple five years to move meaningful production volume to India, he said, which has 12% of smartphone manufacturing globally.
Despite the dire prediction on Apple, its stock rose 15% on Wednesday along with big improvements in other tech stocks after Trump announced the pause on countries other than China. But on Thursday, Apple stock dropped again by 6% and Nvidia dropped by nearly 8% as analysts said the market was absorbing the full impact of tariffs on China imports, affecting both companies. All eyes were focused on Friday's performance.